Singapore Telecommunications Limited’s Management Talks About the Coming Mobile Wars

Singapore’s telecommunications industry currently has three players. That would be Singapore Telecommunications Limited (SGX: Z74), StarHub Ltd (SGX: CC3), and M1 Ltd (SGX: B2F).

But, a fourth telco could be arriving soon, heating up the competition.

Singtel had announced its fiscal fourth-quarter results only a few weeks ago. During the analyst conference call for the results announcement, Singtel’s management was asked about its views on the threat of a fourth telco.

Yuen Kuan Moon, the chief executive of Singtel’s Consumer Singapore business segment, said:

 “We will always look at what is the market asking for and respond with all the various options of creative packaging to allow our customers to have the flexibility of buying different data, different plans. This is regardless whether there’s a new operator coming on board or not…

…So we will continue to push ourselves and innovate more to give our customers options. I think it’s premature to talk about a fourth operator when we have not seen whether the coming spectrum auction is going to appear with a fourth operator or not.”

On top of this, consumer preferences could be shifting towards data usage. Roaming revenue is on the downtrend, putting some pressure on mobile revenues. Yuen also noted this shift in the conference call:

“If you look at the growth of the mobile revenue it is primarily driven by mobile data usage. That has been growing very strongly as we see a lot of our customers taking up more data and signing up higher data packages.

But at the same time the revenue is also driven by other usage like the voice usage as well as the roaming usage, both contributing a big part of the Singtel mobile revenue. What we are seeing, the trend of slowing down is actually on the roaming portion. We see many of our customers are now switching, substituting their voice roaming with data roaming.

That’s why you see a bit of a slowdown in roaming revenue. In fact that has come off quite a fair bit in the last two quarters.”

According to Yuen, roaming revenue made up 22% of total mobile revenue in the last reporting quarter. This is down from 23% in the previous quarter.

Foolish takeaway

Singtel generates its revenue from three business divisions: Group Consumer, Group Enterprise, and Group Digital Life. The Singapore mobile business falls under the Group Consumer division and made up just under 8% of Singtel’s overall revenue for the last reporting quarter.

The telco space may keep evolving. For instance, Liberty Wireless had recently launched a regional mobile virtual network operator (MVNO) called Circles.Life in Singapore. It will be leasing capacity from its competitor, M1. Meanwhile, substitute services such as Whatsapp offers both messaging and voice calls.

Investors need to be aware of the ongoing challenges in the mobile space and observe how Singtel will respond to it.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn't own shares in any company mentioned.